Sirius XM Holdings Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Intangible Assets

Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Our intangible assets include the following:



		December 31, 2019							December 31, 2018
	Weighted Average Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Indefinite life intangible assets:
FCC licenses	Indefinite	$	2,084	$	—		$	2,084	$	2,084	$	—		$	2,084
Trademarks	Indefinite	251		—			251		251		—			251
Definite life intangible assets:
OEM relationships	15 years	220		(90		)	130		220		(76		)	144
Licensing agreements	12 years	45		(42		)	3		45		(38		)	7
Software and technology	7 years	35		(25		)	10		35		(20		)	15
Due to Pandora Acquisition:
Indefinite life intangible assets:
Trademarks	Indefinite	$	331	$	—		$	331	$	—	$	—		$	—
Definite life intangible assets:
Customer relationships	8 years	403		(49		)	354		—		—			—
Software and technology	5 years	373		(69		)	304		—		—			—
Total intangible assets		$	3,742	$	(275	)	$	3,467	$	2,635	$	(134	)	$	2,501

Indefinite Life Intangible Assets

We have identified our FCC licenses and XM, Pandora and Automatic trademarks as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use. As part of the Pandora Acquisition, we also identified $331 related to its trademarks, for which the fair value was determined using the relief from royalty method as of the acquisition date.

We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. Each of the FCC licenses authorizes us to use radio spectrum, a reusable resource that does not deplete or exhaust over time.

ASC 350-30-35, Intangibles - Goodwill and Other, provides for an option to first perform a qualitative assessment to determine whether it is more likely than not that an asset is impaired. If the qualitative assessment supports that it is more likely than not that the fair value of the asset exceeds its carrying value, a quantitative impairment test is not required. If the qualitative assessment does not support the fair value of the asset, then a quantitative assessment is performed. Our annual impairment assessment of our identifiable indefinite lived intangible assets is performed as of the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

We completed qualitative assessments of our FCC licenses and XM, Pandora and Automatic trademarks during the fourth quarter of 2019, 2018 and 2017. As of the date of our annual assessment for 2019, 2018 and 2017, our qualitative impairment assessment of the fair value of our indefinite intangible assets indicated that the fair value of such assets substantially exceeded their carrying value and therefore was not at risk of impairment. No impairment loss was recognized for intangible assets with indefinite lives during the years ended December 31, 2019, 2018 and 2017.

Definite Life Intangible Assets

Definite-lived intangible assets are amortized over their respective estimated useful lives to their estimated residual values, in a pattern that reflects when the economic benefits will be consumed, and are reviewed for impairment under the provisions of ASC 360-10-35, Property, Plant and Equipment/Overall/Subsequent Measurement. We review intangible assets subject to amortization for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the carrying amount of the asset exceeds its fair value. No impairments were recorded for intangible assets with definite lives during the years ended December 31, 2019, 2018 and 2017.

Amortization expense for all definite life intangible assets was $141, $23 and $38 for the years ended December 31, 2019, 2018 and 2017, respectively. We retired definite lived intangible assets of $390 during the year ended December 31, 2018 primarily related to fully amortized subscriber relationships and acquired proprietary software. There were no retirements of definite lived intangible assets during the years ended December 31, 2019 and 2017. As part of the Pandora Acquisition, $776 was allocated to identifiable intangible assets subject to amortization and related to the assessed fair value of customer relationships and software and technology, which was determined by using the multi-period excess earnings method and the relief from royalty method, respectively, as of the acquisition date.

The expected amortization expense for each of the fiscal years 2020 through 2024 and for periods thereafter is as follows:



Years ending December 31,	Amount
2020	$	152
2021	146
2022	144
2023	134
2024	69
Thereafter	156
Total definite life intangible assets, net	$	801